OpenAI signs $38 billion deal with Amazon, first partnership with AWS
OpenAI signs a deal to buy $38 billion worth of capacity Amazon Web Services is its first contract with the cloud infrastructure leader and the latest sign that the $500 billion AI startup is no longer dependent on them Microsoft.
According to the agreement announced on Monday, OpenAI will immediately begin running workloads on AWS infrastructure and reach hundreds of thousands of users. Nvidia’s Graphics processing units (GPUs) are available in the US, and capacity is planned to be increased in the coming years.
Amazon shares rose nearly 5% following the news.
The first phase of the agreement will use existing AWS data centers, and Amazon will eventually build additional infrastructure for OpenAI.
“This is a completely separate capability that we’ve specified,” Dave Brown, AWS’s vice president of computing and machine learning services, said in an interview. “Some of this capacity already exists and OpenAI is using it.”
OpenAI has been on a deal spree lately, announcing construction deals worth nearly $1.4 trillion with companies including Nvidia. broadcom, Seer And Google — prompting skeptics to warn of an AI bubble and question whether the country has the power and resources to turn ambitious promises into reality.
OpenAI had a private cloud deal with Microsoft until this year; This deal first backed the company in 2019, investing a total of $13 billion. In January, Microsoft announced that it would no longer be OpenAI’s sole cloud provider and would move to an arrangement where it would have the right of first refusal for new requests.
Last week, Microsoft’s exclusive status ended under newly negotiated commercial terms with OpenAI, allowing the ChatGPT creator to partner more broadly with other hyperscalers. Even before this, OpenAI had cloud deals with Oracle and Googlebut AWS is by far the market leader.
“Scaling edge AI requires massive, reliable computing,” OpenAI CEO Sam Altman said in a statement on Monday. “Our partnership with AWS strengthens the vast computing ecosystem that will power the next age and bring advanced AI to everyone.”
OpenAI will continue to spend heavily with Microsoft and confirmed this commitment last week by saying it would purchase an additional $250 billion worth of Azure services.
For Amazon, the deal is significant both for the size and scale of the deal because the cloud giant has close ties to OpenAI rival Anthropic. Amazon has invested billions of dollars in Anthropic and is currently building an $11 billion data center campus in New Carlisle, Indiana, designed specifically for Anthropic workloads.
“The breadth and immediate availability of optimized compute demonstrates why AWS is uniquely positioned to support OpenAI’s broad range of AI workloads,” AWS CEO Matt Garman said in the statement.
In last week’s earnings report, Amazon reported more than 20% year-over-year revenue growth on AWS, beating analyst estimates. But growth was faster at Microsoft and Google, which reported cloud expansion of 40% and 34%, respectively.
It starts at Nvidia
The current deal with OpenAI is clearly geared towards the use of Nvidia chips, including two popular Blackwell models, but there is also the potential to add additional silicon down the road. Amazon’s custom-built Trainium chip is being used by Anthropic in the new facility.
“We love Trainium because we can offer our customers something that offers better price performance and honestly gives them choice,” Brown said, adding that he couldn’t give any details “about anything we’re doing with OpenAI at Trainium right now.”
The infrastructure will support both inferences such as powering ChatGPT’s real-time responses and the training of next-generation boundary models. OpenAI may expand with AWS as needed over the next seven years, but plans beyond 2026 have not yet been finalized.
OpenAI CEO Sam Altman (left) shakes hands with Microsoft Chief Technology Officer and Executive VP of AI Kevin Scott during the Microsoft Build conference at the Seattle Convention Center Summit Building on May 21, 2024 in Seattle, Washington, USA.
Jason Redmond | Afp | Getty Images
OpenAI’s core models, including open weight options, are already available on Bedrock, AWS’s managed service for accessing leading AI systems.
Companies involved peloton, Thomson Reuters, comscoreand Triomics uses OpenAI models on AWS for a variety of tasks, from coding and mathematical problem solving to scientific analysis and mediated workflows.
Monday’s announcement establishes a more direct relationship.
“As part of this agreement, OpenAI is a customer of AWS,” Brown said. “They’ve committed to buying compute capacity from us, and we charge OpenAI for that capacity. It’s very, very simple.”
For OpenAI, the most valuable private AI company, the AWS deal is another step in preparing to eventually go public. OpenAI is signaling both independence and operational maturity by diversifying cloud partners and locking in long-term capacity across providers.
Altman admitted in a recent livestream: IPO This is the “most likely path” given OpenAI’s capital needs. CFO Sarah Friar echoed that sentiment, framing the latest corporate restructuring as a necessary step toward going public.
WRISTWATCH: AWS CEO Matt Garman talks about Amazon’s massive new AI data center for Anthropic
